The Regulation Of Corporate Governance

Corporate governance is a set of actions used to handle the relationship between stakeholders by determining and controlling the strategic direction and performance of the organization. Corporate governance major concern is making sure that the strategic decisions are effective and that it paves the way towards strategic competitiveness. (Hitt, Ireland, Hoskisson, 2017, p. 310). In today’s corporation, the primary objective of corporate governance is to align top-level manager’s and stakeholders interest. That is why corporate governance is involved when there is a conflict of interest between with the owners, managers, and members of the board of directors (Hitt, Ireland, Hoskisson, 2017, p. 310-311).

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

The article is written to help readers gain a solid understanding the roles of corporate governance, both inside and outside the company. Its goal is simply to impart information, not make claims or arguments on its own. I will be judging it mainly on the sources gathered, numerous examples and explanations given and the overall effectiveness it possesses in effectively communicating its ideas.

At the least the board will have operated outside the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations (ASX 2010, p13-49). These principles form the basis of good corporate governance ideas in Australia and are designed to optimise corporate performance and accountability (ASX 2010, p5) and draw from the ‘if not why not’ philosophy.

This was a very interesting article, in my opinion it brings to mind the derived phrase, which came first the chicken or the egg. Meaning, is corporate governance an attempt to control the results of unethical practices of corporations or is it meant to deter them. In reading this article, it is clear that certain corporations practiced unethical business behaviors for self-interest, but the questions this author have are: 1. Should corporate governance be regulated by the legislature as well as the organization and to what degree, 2. Is corporate governance, there to protect the shareholder or the stakeholder, 3. How effective is corporate governance on a global level. The need for a governance system is based on the assumption that the separation between the owners of a company and its management provides self-interest executives the opportunity to take actions that benefit themselves, with the cost of these actions borne by the owners (Larcker & Tayan, 2008).

How the latest edition (3rd) of the ASX Corporate Governance Principles plausibly halts the failure of Dick Smith Electronics will be discussed in this essay. I argue that ASX Corporate Governance Principles is one of the corporate governance practices that many listed entities in Australia should comply with in order to achieve good corporate governance preventing the collapse of corporations and increasing investors’ confidence. Regarding Dick Smith Electronics as a listed entity, it would survive and continuously operate as a biggest Australia electronic retailer if the better application of this practice is fully adopted.

The ASX Corporate Governance Council defines the ‘corporate governance’ as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations (Corporate Governance Principles and Recommendations, 2014). The term “failure” of a corporate can be described as “Insolvency” in Australia (Michaela Rankin, 2012). And the reasons for corporate failure can be grouped into six categories: 1. Poor strategic decisions. 2. Greed and the desire for power. 3. Overexpansion and ill-judged acquisitions. 4. Dominant CEOs. 5. Failure of internal controls 6. Ineffective boards(Michaela Rankin, 2012).

The corporation laws in Australia are, by and large, borrowed from the UK Company Law. Its legal structure entails a unitary national statute which is the Corporations Act 2001. This particular statute is under the authority of the Australian Securities and Investments Commission (ASIC). However, all corporation legislations are reported to the Treasurer with references being made to the judgement of the courts as is the case in the United Kingdom.

Most of the Australian corporation law has been brought from Company Law of United kingdom. Australian corporation law legally structured by only one national statute, i.e. Corporation Act 2001. The Australian Securities and Investments Commission is the only regulatory authority who administrate this statute (Corporation Act 2001) throughout the whole nation. ASIC regulates Australia’s corporate, markets and financial services. This authority is set up as per and administer the ASIC Act 2001. ASIC carries most of its work according to the Corporation Act 2001. In the essay below with the help and reference of some case examples and subsections of Corporation Act 2001 I have discussed about the signs of insolvent company, what actions should

The Corporations Law in Australia was heavily based on the British framework since their settlement in here in 1788. As time went by the Commonwealth Law was making it tougher and more expensive to do business within Australian states. A few changes happened after the Second World War and in 1990, New South Wales V Commonwealth took place and was pivotal to the decision to make a better framework. Under the Australian Corporations Law, Directors duties are similar with other jurisdictions. There are two major types of duties which have subclasses under them. These two duties are general law (Fiduciary) and statutory. Fiduciary duties under the Corporations Law include care and diligence, loyalty and good faith. These general law duties are enforced by the company or the liquidator if the company is closing down. These duties then lead on to statutory duties which elaborates on the general law duties which applies to directors. If broken, statutory duties are enforced by the Australian Securities and Investment

This essay will discuss how to use corporate governance to prevent corporate failure. I will use the case of the failed Australian insurance company HIH to argue how to use ASX Corporate Governance Principles to prevent corporate failure. I will recommend to apply three ASX Corporate Governance Principles to change the HIH situations and finally choose the best course of action of the three.

In Australia the corporate failures means the “insolvency” that a company cease its business operation(Michaela 2012, 365-366). The categories of corporate failures are six possible reasons that lead the failure of corporate(Mickelwaith 2006, 2-6). The accounting theory is a way to explain the accounting practice or prescribe how accounting should be done(Michaela 2012, 133-134). Additionally, the corporate governance was defined that the framework of rules, relationships, systems and processes can be exercised and controlled by corporate(Council 2014, 3).

Corporate governance importance arises in modern corporations due to the separation of management and ownership control in the organizations. In this task the three key elements that are thought seriously about are social responsibilty, shareholder

Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the